I *assume* that the LONGHAUL WINGS doesn't go to a 2-5-2 seating on the Airbus A330/340 size.
And the 29'' seating in Y class. Just to add the throwing out of the large galley complex and only serving some cold menu items.
On the long run this doesn't create a great brand value for the Lufthansa Gorup of Companies.
It's just about scanting and pressing all of productivity out of that aircraft.
I doubt that this will work for the new middle-class in Asia on their move to the sights of the World.
If you remember the "impressive" sheet on the presentation of Carsten Spohr where he predicts a tendency for growth in Asia and not in Europe...
First of all, I'm 99% sure they'll go for either a 3-3-3 or 2-5-2 in their A330/A340 planes. Even LX will go 3-4-3 in their 777... squeezing one more seat is now getting normal even for "good" carriers, even EK is thinking of 3-5-3 in their A380.. Lufti's LCC will definitely squeeze the maximum of seats inside.
And yes, no one who gets the choice of another carrier will choose them. That's why Air Asia X didn't succeed on long hauls. People compared prices and decided that for 50£ more they get free drinks, IFE, acceptable seat pitch, food, luggage, etc. - you can't compare local flights to longhaul LCC operation. Norwegian can do it apparently, but I'm sure it only works because they put some numbers around, ie short haul operations supplying long haul etc.
There will be WAY too little people to choose LH-Cheap over EK, TK, EY etc. when the later one's are less than 100€ more expensive.
And if they can offer Bangkok for 500€, LH-Cheap can't offer it for sub-400€, I'm pretty sure about that. Going cheap is fine, but going cheap long haul is a totally different thingy than short haul..